California Real Estate Salesperson — All Questions

Under an exclusive right to sell listing, the broker earns a commission if the property sells during the listing term:

• a.Only if the owner personally sells it
• b.No matter who procures the buyer, including the owner✓
• c.Only if the listing broker finds the buyer
• d.Only if another broker finds the buyer

An exclusive right to sell listing entitles the broker to a commission if the property sells during the term regardless of who finds the buyer, even the owner. It offers the broker the greatest protection and is the most common listing type. This differs from an exclusive agency, where an owner-procured sale earns no commission.CA Civil Code

An open listing given to several brokers at once means that:

• a.All listed brokers split any commission
• b.Only the broker who procures the buyer earns a commission✓
• c.Only one broker may show the property
• d.The seller cannot sell it personally

In an open listing, a seller may engage multiple brokers and only the one who actually procures the buyer earns a commission. The seller may also sell the property personally without owing any commission. This nonexclusive arrangement offers brokers the least protection.CA Civil Code

In a net listing, the broker's commission is:

• a.Paid by the buyer
• b.A fixed percentage set by law
• c.Any amount received above the seller's stated net price✓
• d.Always 6% of the sale price

In a net listing the seller sets a minimum net amount, and the broker keeps anything received above that figure as commission. Because it invites conflicts of interest, the broker must disclose the exact selling price and commission, and some states ban net listings. California permits them only with full disclosure.CA Business & Professions Code

For a real estate purchase agreement to be enforceable in California, it generally must be:

• a.Approved by the DRE
• b.In writing and signed by the parties✓
• c.Notarized
• d.Recorded

Under the statute of frauds, contracts for the sale of real property must be in writing and signed by the party to be charged to be enforceable. Oral real estate purchase agreements are generally unenforceable. The writing must contain the essential terms of the deal.CA Civil Code

A home sells for $500,000 at a 6% total commission. If the listing and selling brokers split it equally, each brokerage receives:

• a.$30,000
• b.$7,500
• c.$18,000
• d.$15,000✓

The total commission is 6 percent of $500,000, which is $30,000, and an equal split gives each brokerage $15,000. Commission is calculated on the final sale price. The split between listing and selling sides is set by agreement.

A sale closes on the first day of a 30-day month. Annual property taxes are $3,600, paid in arrears. Using a 360-day year, the daily tax proration amount is:

• a.$5
• b.$30
• c.$10✓
• d.$12

Annual taxes of $3,600 divided by 360 days equals $10 per day. Proration divides shared expenses like taxes between buyer and seller based on the closing date. A 360-day banker's year is often used to simplify the math.

A rectangular parcel measures 220 feet by 198 feet. Given that one acre equals 43,560 square feet, the parcel contains:

• a.1 acre✓
• b.2 acres
• c.0.5 acre
• d.0.75 acre

The area is 220 times 198, which equals 43,560 square feet, and dividing by 43,560 square feet per acre gives exactly 1 acre. Area of a rectangle is length times width. Memorizing 43,560 square feet per acre is essential for real estate math.

An investor buys a property for $250,000 and sells it for $300,000. The percentage of profit based on cost is:

• a.16.7%
• b.20%✓
• c.10%
• d.15%

Profit is $300,000 minus $250,000, or $50,000, and $50,000 divided by the $250,000 cost equals 0.20, or 20 percent. Profit percentage is typically figured on the original cost or basis. This measures return relative to the amount invested.

A salesperson receives 60% of the 3% commission their brokerage earns on a $400,000 sale. The salesperson's share is:

• a.$7,200✓
• b.$6,000
• c.$12,000
• d.$4,800

The brokerage earns 3 percent of $400,000, which is $12,000, and 60 percent of that is $7,200. Commission first goes to the broker, who then pays the salesperson their agreed share. Salespersons are always paid through their employing broker.

A broker who holds client trust funds must generally deposit them into a neutral escrow depository or a trust account no later than:

• a.Only when the deal falls through
• b.Within 30 days
• c.Three business days after receipt✓
• d.At close of escrow

California requires a broker to place trust funds into a neutral escrow, a trust account, or into the principal's hands not later than three business days after receipt. Prompt handling prevents commingling and protects clients. The DRE audits trust fund records closely.CA Business & Professions Code

A property manager who collects rents and leases units for owners in California generally must:

• a.Be a licensed appraiser
• b.Hold a real estate license or work under a licensed broker✓
• c.Register with the IRS only
• d.Hold a contractor's license

Leasing property and collecting rents for others for compensation are licensed real estate activities in California, so a property manager generally must be a licensee or work under a broker. Resident managers of apartment buildings are a limited exception. Property management agreements should be in writing.CA Business & Professions Code

A licensee who tells prospective buyers false information about a competing listing to steer them to their own listing has most likely committed:

• a.A fiduciary duty to the buyer
• b.Lawful advertising
• c.An unethical and possibly fraudulent act✓
• d.Permissible puffing

Deliberately making false statements about another listing to divert buyers is dishonest dealing that violates professional ethics and California license law. It can constitute fraud or misrepresentation subject to discipline. Licensees must deal honestly with all parties.CA Business & Professions Code

Which of the following is an essential element of a valid contract?

• a.A real estate license
• b.Notarization
• c.Lawful object and mutual consent✓
• d.Recording

A valid contract requires capable parties, mutual consent, lawful object, and sufficient consideration. Notarization and recording are not required for a contract's validity. A purchase agreement missing an essential element may be void or voidable.CA Civil Code

An option contract in real estate gives the optionee the:

• a.Right to occupy without paying
• b.Right, but not the obligation, to buy within a set time and price✓
• c.Immediate ownership of the property
• d.Obligation to buy the property

An option grants the optionee the exclusive right, but not the obligation, to purchase the property at a set price within a stated period, in exchange for option consideration. The optionor must sell if the optionee exercises the option. If the option lapses unexercised, the consideration is typically forfeited.CA Civil Code

When a seller responds to a buyer's offer by changing the price, the seller has made a:

• a.Novation
• b.Ratification
• c.Counteroffer that rejects the original offer✓
• d.Binding acceptance

Changing any material term of an offer creates a counteroffer, which legally rejects the original offer and creates a new offer the other party may accept or reject. The original offer can no longer be accepted once countered. Acceptance must mirror the offer exactly to form a contract.CA Civil Code

Escrow closes on the last day of a 30-day month. The seller has already paid the full month's $900 of homeowner association dues. Using a 30-day month, the buyer owes the seller for how many days?

• a.1 day✓
• b.15 days
• c.10 days
• d.30 days

If the seller is responsible through the closing date and closing is the final day, the buyer owns only that last day, owing 1 day of the prepaid dues, which is $900 divided by 30, or $30. Proration allocates prepaid expenses between the parties. The exact day counted depends on the escrow instructions.

A house has a rectangular footprint of 40 feet by 50 feet. Its ground-floor area is:

• a.1,600 square feet
• b.900 square feet
• c.2,000 square feet✓
• d.2,400 square feet

Area equals length times width, so 40 feet times 50 feet equals 2,000 square feet. Square footage calculations are used for pricing, appraisal, and construction estimates. Always confirm which areas are included in the measurement.

An owner sells a property for $360,000, which represents a 20% loss from what she originally paid. What did she originally pay?

• a.$400,000
• b.$450,000✓
• c.$300,000
• d.$432,000

If $360,000 is 80 percent of the original cost after a 20 percent loss, then the original price equals $360,000 divided by 0.80, which is $450,000. Loss percentages are figured on the original cost. Set the sale price equal to the cost times one minus the loss rate and solve.

A brokerage charges a 5% commission on a $520,000 sale. The listing side keeps 40% and the selling side gets 60%. How much does the selling side receive?

• a.$10,400
• b.$15,600✓
• c.$13,000
• d.$26,000

The total commission is 5 percent of $520,000, which is $26,000, and the selling side's 60 percent share equals $15,600. Commission splits are negotiated between the brokerages involved. The listing side would receive the remaining $10,400.

For an unfurnished residential rental in California, the security deposit a landlord may collect is limited by statute. A landlord may NOT:

• a.Charge first month's rent
• b.Collect a cleaning fee at move-out for actual cleaning
• c.Charge a nonrefundable security deposit✓
• d.Require a written lease

California prohibits nonrefundable security deposits; all deposits must be refundable, subject to lawful deductions for unpaid rent and damages beyond normal wear. Statutory limits cap the total deposit amount. The landlord must return the deposit or an itemized accounting within a set period after move-out.CA Civil Code

Under an exclusive agency listing, the seller owes no commission if the property is sold by:

• a.A subagent of the listing broker
• b.The owner personally, without any broker's involvement✓
• c.Any cooperating broker in the MLS
• d.The listing broker during the term

An exclusive agency listing lets the seller reserve the right to sell the property personally with no commission owed, but any broker-procured sale during the term earns the listing broker a commission. It differs from an exclusive right to sell, where even an owner sale earns commission. It gives the seller one escape from the fee.CA Civil Code

A listing agreement is best characterized as:

• a.A security instrument for a loan
• b.A conveyance of title to the broker
• c.An employment contract between the seller and the broker✓
• d.A lease of the property to the broker

A listing is an employment or agency contract in which the seller hires the broker to find a ready, willing, and able buyer. It does not transfer any interest in the property. An exclusive listing in California must be in writing with a definite termination date.CA Civil Code

Under California law, an exclusive listing must contain:

• a.A notarized seller signature
• b.An automatic renewal clause
• c.A commission rate fixed by the DRE
• d.A definite, specified termination date✓

California requires exclusive listings to state a definite termination date; a listing with an open-ended automatic extension can subject the broker to discipline. The fixed end date protects the seller. Commission rates themselves remain fully negotiable.CA Business & Professions Code

The broker who sets in motion an uninterrupted chain of events leading to a sale is entitled to the commission as the:

• a.Procuring cause of the sale✓
• b.Subagent of the buyer
• c.Designated dual agent
• d.Neutral escrow officer

Procuring cause is the broker whose efforts primarily bring about the ready, willing, and able buyer, entitling that broker to the commission. Disputes over procuring cause are common in open listings. The broker must be the effective, uninterrupted cause of the sale.

A broker generally earns the commission when they produce a buyer who is:

• a.Unable to qualify for financing
• b.Interested but not yet committed
• c.Ready, willing, and able to buy on the seller's terms✓
• d.Merely curious about the property

The broker classically earns the commission by producing a buyer ready, willing, and able to purchase on the terms stated in the listing, even if the seller then backs out. 'Able' means financially capable of completing the purchase. Many contracts, however, tie the fee to actual closing.

The Multiple Listing Service (MLS) primarily functions to:

• a.Set commission rates across the state
• b.Let member brokers share listings and offers of cooperation and compensation✓
• c.License and discipline real estate agents
• d.Appraise properties for mortgage lenders

The MLS is a cooperative database where member brokers share listing information and offer compensation to cooperating brokers who bring buyers. It broadens exposure for sellers and inventory for buyers. It is a private service, not a government body, and does not set fees.

A property management agreement between an owner and a broker should:

• a.Remain oral to preserve flexibility
• b.Be recorded against the property's title
• c.Transfer ownership of the property to the manager
• d.Be in writing and define the manager's authority, duties, and compensation✓

A property management agreement should be written, spelling out the manager's authority, responsibilities, reporting, and fees, and it creates an agency relationship. The manager owes the owner fiduciary duties. Collecting rent and leasing for others requires a real estate license.CA Business & Professions Code

A property manager collecting tenant rents for an owner must place those funds in:

• a.A trust account, kept separate from the broker's own funds✓
• b.A general business operating account
• c.The broker's personal checking account
• d.Cash held in the office safe indefinitely

Rents collected for an owner are trust funds that must be held in a trust account, separate from the broker's money, to avoid commingling. The manager accounts to the owner regularly. Mishandling trust funds is a serious DRE violation.CA Business & Professions Code

California generally requires a resident manager on the premises of an apartment building with:

• a.16 or more dwelling units✓
• b.8 or more dwelling units
• c.4 or more dwelling units
• d.50 or more dwelling units

California requires a resident manager for apartment complexes of 16 or more units so someone is available for tenant needs. Smaller buildings do not require an on-site manager. A resident manager of the building where they live is exempt from the real estate licensing requirement.

As of California's current security deposit law effective in 2024, a landlord may generally collect a security deposit of no more than:

• a.Two months' rent for unfurnished units
• b.Any amount agreed to in the lease
• c.Three months' rent for furnished units
• d.One month's rent for most landlords✓

California law (AB 12, effective July 1, 2024) generally caps security deposits at one month's rent, whether the unit is furnished or unfurnished. A limited exception lets certain small landlords collect up to two months. This replaced the older two-month unfurnished and three-month furnished limits.CA Civil Code

After a residential tenant moves out in California, the landlord must return the deposit or provide an itemized statement of deductions within:

• a.30 calendar days
• b.60 calendar days
• c.21 calendar days✓
• d.10 business days

California requires the landlord to return the security deposit, or an itemized accounting of lawful deductions, within 21 calendar days after the tenant vacates. Deductions are allowed for unpaid rent, cleaning, and damage beyond ordinary wear. Failure can expose the landlord to penalties.CA Civil Code

A California landlord seeking to evict a tenant for nonpayment of rent generally must first serve a:

• a.30-day no-cause notice
• b.60-day termination notice
• c.Immediate lockout notice
• d.3-day notice to pay rent or quit✓

For nonpayment, the landlord serves a 3-day notice to pay rent or quit before filing an unlawful detainer. If the tenant pays within the period, the tenancy continues. Self-help lockouts are illegal; eviction must go through the court.CA Code of Civil Procedure

To end a month-to-month tenancy in California when the tenant has lived there over one year, the landlord (absent just-cause rules) must generally give:

• a.No advance notice at all
• b.3 days' written notice
• c.60 days' written notice✓
• d.30 days' written notice

For a tenant of one year or more, California generally requires 60 days' notice to terminate a month-to-month tenancy; a tenant of less than a year gets 30 days. Statewide just-cause rules may impose additional requirements. A tenant who is terminating generally gives 30 days.CA Civil Code

The California court action a landlord uses to legally regain possession from a holdover tenant is called:

• a.An unlawful detainer✓
• b.A judicial foreclosure
• c.A partition suit
• d.A quiet title action

Unlawful detainer is the summary court proceeding to evict a tenant who fails to pay rent or holds over after proper notice. It is a relatively fast process focused only on possession. Landlords may not use self-help such as changing locks or removing belongings.CA Code of Civil Procedure

A California residential landlord's duty to keep the unit fit to live in, with working plumbing, heat, and a weatherproof structure, is the:

• a.Tenant's right of first refusal
• b.Covenant of quiet enjoyment
• c.Warranty of marketable title
• d.Implied warranty of habitability✓

The implied warranty of habitability requires landlords to maintain rental units in a livable condition, including working plumbing, heating, and a safe, weatherproof structure. Tenants may have remedies such as repair-and-deduct if the landlord fails. It cannot be waived in a residential lease.CA Civil Code

The covenant of quiet enjoyment in a lease guarantees the tenant:

• a.An automatic annual rent reduction
• b.The right to possess and use the premises without wrongful interference by the landlord✓
• c.Free utilities for the lease term
• d.A completely soundproof unit

The covenant of quiet enjoyment assures the tenant the right to use and enjoy the property without unlawful disturbance from the landlord or those claiming under the landlord. It does not relate to literal noise. A serious breach can amount to constructive eviction.CA Civil Code

Before entering a tenant's unit for non-emergency repairs, a California landlord must generally give the tenant:

• a.At least 24 hours' notice✓
• b.At least 72 hours' notice
• c.No advance notice
• d.At least 7 days' notice

California requires reasonable notice, presumed to be 24 hours, before a landlord enters for non-emergency reasons such as repairs or showings. Entry must be during normal business hours absent agreement. Genuine emergencies allow entry without prior notice.CA Civil Code

A common environmental hazard found in older building insulation and floor tiles, dangerous when its fibers become airborne, is:

• a.Radon
• b.Carbon monoxide
• c.Formaldehyde
• d.Asbestos✓

Asbestos was widely used in insulation, floor and ceiling tiles, and pipe wrap before the late 1970s, and it poses a health risk when fibers are disturbed and inhaled. Removal or encapsulation should be done by trained professionals. Sellers must disclose known asbestos hazards.

A naturally occurring radioactive gas that can seep from soil into homes and is a leading cause of lung cancer is:

• a.Formaldehyde
• b.Radon✓
• c.Asbestos
• d.Methane

Radon is an odorless, colorless radioactive gas produced by the breakdown of uranium in soil that can accumulate in enclosed spaces. Testing and mitigation systems can reduce indoor levels. Known radon problems are a material fact requiring disclosure.

Visible mold growth from chronic moisture in a home is significant because it:

• a.Need not be disclosed under any circumstances
• b.Is never the seller's responsibility
• c.Improves the home's indoor air quality
• d.Is a material fact affecting health and value that must be disclosed if known✓

Mold from water intrusion can affect health and property value, making known mold a material fact the seller and agent must disclose. Buyers may investigate the source of moisture. Remediation involves fixing the water problem and removing affected materials.CA Civil Code

The federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) can hold a current property owner responsible for:

• a.Covering the buyer's closing costs
• b.Paying the listing broker's commission
• c.Paying the current tenants' rent
• d.Cleanup of hazardous-substance contamination, even if a prior owner caused it✓

CERCLA, or Superfund, imposes strict and often joint and several liability for cleaning up hazardous contamination, which can reach current owners even if a previous owner caused the problem. An innocent-landowner defense requires due diligence before purchase. This is why environmental site assessments matter in commercial deals.

Before the sale or transfer of most California homes, the seller must certify that the property has:

• a.Working smoke detectors and a properly braced (strapped) water heater✓
• b.A brand-new roof
• c.Rooftop solar panels
• d.A monitored burglar alarm

California requires that homes have operable smoke detectors and that water heaters be braced, anchored, or strapped to resist earthquake movement, and the seller certifies compliance at transfer. These are inexpensive safety measures. Carbon monoxide detectors are also required in units with fuel-burning appliances or attached garages.CA Health and Safety Code

If a home lies within a FEMA-designated special flood hazard area, a federally regulated lender will generally require the borrower to carry:

• a.No additional coverage
• b.Only a lender's title policy
• c.Flood insurance✓
• d.Earthquake insurance

Federally regulated or insured lenders require flood insurance for homes in FEMA special flood hazard areas as a condition of the loan. Standard hazard policies exclude flood damage. The property's flood status is also disclosed on the Natural Hazard Disclosure Statement.

A cooperating broker who works with the buyer but represents the seller through the listing broker acts as a:

• a.Dual agent for both parties
• b.Subagent of the seller✓
• c.Exclusive buyer's agent
• d.Designated agent for the buyer

Under traditional subagency, a cooperating broker helps the buyer but legally represents the seller by extension of the listing broker, owing fiduciary duties to the seller. This arrangement has faded as buyer representation has grown. The buyer should understand whom the agent actually represents.CA Civil Code

California's agency disclosure form requires each agent to identify whether they represent:

• a.The seller alone, the buyer alone, or both parties as a dual agent✓
• b.The mortgage lender
• c.The appraiser of record
• d.The neutral escrow company

The agency confirmation portion requires each agent to state whether they represent the seller alone, the buyer alone, or both as a dual agent. This must be confirmed before the principal signs the purchase contract. Clear disclosure prevents undisclosed dual agency, which is prohibited.CA Civil Code

A licensee who receives an undisclosed rebate from a termite company for referring the seller's inspection has engaged in:

• a.Taking an undisclosed secret profit, a breach of fiduciary duty✓
• b.A lawful and routine referral
• c.Permissible dual compensation
• d.An ordinary business courtesy

Accepting an undisclosed rebate or referral fee is a secret profit that breaches the agent's duty to disclose and account to the principal, and it may violate RESPA. All compensation and rebates must be disclosed and consented to. Hidden profits can lead to discipline and forfeiture of the fee.CA Business & Professions Code

To renew a California real estate license, a licensee must generally complete:

• a.45 hours of approved continuing education every four years✓
• b.No continuing education at all
• c.200 hours of education every two years
• d.12 hours of education every year

California requires 45 clock hours of approved continuing education for each four-year license renewal, including mandated topics such as ethics, agency, fair housing, trust fund handling, and risk management. This keeps licensees current on law and practice. Requirements differ slightly for a first renewal.CA Business & Professions Code

A California broker must generally retain copies of listings, deposit receipts, and other transaction documents for at least:

• a.Ten years
• b.Six months
• c.Three years✓
• d.One year

California requires brokers to keep transaction records, including listings and trust fund records, for at least three years, and the DRE may inspect them. Proper recordkeeping supports audits and dispute resolution. The retention period runs from the closing or listing date.CA Business & Professions Code

A 'blind ad' that violates California license law is one that:

• a.Names the general neighborhood
• b.Fails to disclose that the advertiser is a real estate licensee✓
• c.States the property's asking price
• d.Includes a photo of the home

A blind ad conceals that a licensee is behind the advertisement, misleading the public into thinking it is a private-party sale. California requires licensees to identify themselves as agents or brokers in their advertising. Team and DBA names must also be properly disclosed.CA Business & Professions Code

An 'as-is' clause in a California residential purchase contract:

• a.Eliminates all of the seller's disclosure duties
• b.Automatically waives the buyer's inspection rights
• c.Voids the required transfer disclosure statement
• d.Does not relieve the seller and agent of the duty to disclose known material defects✓

Selling 'as-is' means the buyer accepts the property's current condition, but it does not excuse the seller or agent from disclosing known material defects. Required disclosures like the TDS still apply. The buyer retains the right to inspect.CA Civil Code

A financing contingency in a purchase agreement allows the buyer to:

• a.Occupy the home before closing rent-free
• b.Assume the seller's existing loan automatically
• c.Force the seller to lower the price
• d.Cancel and recover the deposit if they cannot obtain the specified loan✓

A financing contingency conditions the purchase on the buyer obtaining a stated loan, allowing cancellation with return of the deposit if financing fails within the contingency period. Contingencies must usually be removed in writing in California. Once removed, the buyer risks the deposit if they back out.

A liquidated damages clause in a California residential purchase contract generally limits the seller's damages on buyer default to:

• a.Double the total sales commission
• b.The entire purchase price of the home
• c.Nothing, because such clauses are void
• d.The buyer's deposit, capped at 3% of the price for a dwelling of up to four units✓

A validly initialed liquidated damages clause lets the seller keep the buyer's deposit as the agreed measure of damages; for a one-to-four unit dwelling the buyer intends to occupy, the retained amount is capped at 3 percent of the price. Amounts above that are presumed unreasonable. Both parties must separately initial the clause.CA Civil Code

A buyer who sues to force a breaching seller to actually convey the unique property is seeking the remedy of:

• a.Liquidated damages
• b.Specific performance✓
• c.Rescission of the contract
• d.Novation of the parties

Specific performance compels a breaching party to complete the contract, and courts grant it for real estate because each parcel is considered unique. The buyer asks the court to order conveyance rather than accept money damages. It is an equitable remedy.CA Civil Code

The remedy that cancels a contract and returns both parties to their pre-contract positions is:

• a.Acceleration
• b.Assignment
• c.Rescission✓
• d.Ratification

Rescission unwinds a contract, restoring the parties to where they stood before, and may be based on fraud, mistake, or mutual agreement. Any consideration exchanged is generally returned. It differs from a suit for damages, which keeps the contract intact.CA Civil Code

Substituting a new party or a new contract for an existing one, with the original obligor released, is called:

• a.Subrogation
• b.Reconveyance
• c.Novation✓
• d.Assignment

Novation replaces a party or an obligation with a new one, releasing the original party from liability, and it requires the consent of all parties. In an assignment, by contrast, the original party often remains secondarily liable. Novation is common when a buyer formally assumes and replaces a seller's loan obligation.CA Civil Code

When a party transfers their rights under a contract to another but may remain secondarily liable, this is an:

• a.Reconveyance
• b.Novation
• c.Acceleration
• d.Assignment✓

An assignment transfers a party's contractual rights, and often duties, to another, but unlike novation it does not necessarily release the original party from liability. Many contracts permit assignment unless expressly prohibited. Personal-service and some financing contracts may restrict it.CA Civil Code

A 'time is of the essence' clause in a purchase contract means:

• a.Closing may occur anytime that year
• b.Either party may extend dates at will
• c.The contract has no real deadlines
• d.The stated deadlines are material and must be strictly met✓

A time-is-of-the-essence clause makes the contract's deadlines material, so failing to perform on time can be a breach. It signals that dates for contingencies, deposits, and closing must be honored. Courts enforce these timeframes strictly.CA Civil Code

The earnest money deposit a buyer submits with an offer primarily serves to:

• a.Cover the seller's moving expenses
• b.Replace the down payment entirely
• c.Pay the listing broker's commission directly
• d.Show the buyer's good faith and provide funds toward the purchase✓

Earnest money demonstrates the buyer's serious intent and is credited toward the down payment or closing costs at closing. It is typically held in a neutral escrow or trust account, not spent. If the buyer defaults, the seller may claim it under a liquidated damages clause.

Whether a built-in bookcase is a fixture that stays with the property is determined mainly by tests including method of attachment, adaptability, and:

• a.The original purchase price of the item
• b.The buyer's personal preference
• c.The intention of the party who installed it✓
• d.The color of the item

Courts judge fixtures by the method of annexation, adaptation to the property, and especially the intention of the person who installed the item, along with any agreement of the parties. A fixture is treated as part of the real property and normally transfers with it. Ambiguous items should be addressed in the contract.CA Civil Code

Items a commercial tenant installs to conduct business, which the tenant may remove before the lease ends, are:

• a.Trade fixtures✓
• b.Emblements
• c.Riparian rights
• d.Appurtenances

Trade fixtures are articles a business tenant attaches for their trade, and the tenant generally may remove them before the lease expires, repairing any damage. Unlike ordinary fixtures, they remain the tenant's personal property. Items left behind may become the landlord's by accession.CA Civil Code

California's Tenant Protection Act of 2019 generally imposes on many rental units both a cap on rent increases and:

• a.A total ban on any rent increases
• b.Free relocation payments for all tenants
• c.Mandatory local rent control everywhere
• d.A just-cause requirement for evicting tenants after 12 months of occupancy✓

The Tenant Protection Act (AB 1482) caps annual rent increases, generally 5 percent plus inflation up to 10 percent, and requires just cause to evict tenants of 12 months or more for covered units. Certain newer construction and single-family homes with proper notice are exempt. It set a statewide baseline atop any stricter local rules.CA Civil Code

California's Costa-Hawkins Rental Housing Act limits local rent control by:

• a.Capping security deposits at one month
• b.Exempting most single-family homes and new construction and allowing vacancy decontrol✓
• c.Banning all forms of local rent control
• d.Requiring rent control in every city

Costa-Hawkins prevents cities from applying rent control to most single-family homes and condominiums and to units built after February 1995, and it permits vacancy decontrol, resetting rent to market when a tenant leaves. It sets outer limits on local ordinances. AB 1482 later added a statewide cap that operates differently.CA Civil Code

Under fair housing law, a qualified senior (55-and-older) housing community may lawfully:

• a.Refuse tenants based on their race
• b.Exclude applicants who have disabilities
• c.Limit occupancy by age, an exception to the familial-status protection✓
• d.Deny housing based on religion

Qualified senior housing communities may restrict residency by age under a specific exemption to the familial-status protection, provided they meet statutory requirements such as the 55-or-older occupancy standard. This does not permit discrimination on other protected bases like race or disability. The exemption is narrow and must be documented.Fair Housing Act

If an agent knowingly overstates a home's square footage in the MLS and the buyer relies on it, the agent may be liable for:

• a.A harmless good-faith estimate
• b.Negligent or intentional misrepresentation✓
• c.No liability of any kind
• d.Lawful and permissible puffing

Stating a specific, verifiable fact like square footage that is false and relied upon can be actionable misrepresentation, unlike vague opinion or puffing. Agents should cite the source of measurements or advise buyers to verify independently. Careless or knowing misstatements can lead to damages and discipline.CA Civil Code

In California, real estate commission rates are:

• a.Fully negotiable between the broker and the client✓
• b.Fixed by the local MLS board
• c.Mandated at 6 percent by statute
• d.Set by the Department of Real Estate

Commission rates are always negotiable between broker and client; no law or board may set or fix them, and agreements among competitors to do so violate antitrust law. The rate and any cooperating split are matters of private contract. Sellers should understand the fee is not standardized.CA Business & Professions Code

A licensee who buys a listed property for their own account must:

• a.Avoid using a neutral escrow
• b.Conceal their license status to negotiate a lower price
• c.Disclose in writing that they are a licensed agent acting as a principal✓
• d.Act as a dual agent for the seller and themselves

When a licensee purchases property for their own account, they must disclose their licensed status and that they are acting as a principal, because their knowledge and interest could affect the seller. Concealing the agent's role is dishonest dealing. Full disclosure protects the other party and the licensee.CA Business & Professions Code

A listing agent who receives multiple written offers on a property generally must:

• a.Present all offers to the seller unless instructed otherwise in writing✓
• b.Present only offers from their own buyers
• c.Present only the single highest offer
• d.Reject low offers without telling the seller

The agent's duty to the seller requires presenting all bona fide written offers promptly so the seller can decide, unless the seller has directed otherwise in writing. Withholding offers can breach fiduciary duty and fair housing rules. The seller, not the agent, chooses which offer to accept.CA Civil Code

During the agent's required visual inspection, a water stain on a ceiling is a 'red flag' meaning the agent should:

• a.Disclose the observation and recommend further investigation of a possible leak✓
• b.Ignore it as merely cosmetic
• c.Assure the buyer it is definitely nothing
• d.Repaint over it before showings

A red flag is a visible sign suggesting a possible defect; the agent must disclose what was observed and advise the buyer to investigate further, not diagnose or conceal it. A ceiling stain may indicate a roof or plumbing leak. Agents are not expected to inspect inaccessible areas.CA Civil Code

A real estate salesperson may work as an independent contractor for tax purposes, but for license-law supervision the broker:

• a.Remains responsible for supervising the salesperson's licensed activities✓
• b.Must instead treat them only as a W-2 employee
• c.Has no duty to supervise at all
• d.May disregard their trust-fund handling

Even when a salesperson is treated as an independent contractor for taxes, the broker must actively supervise their licensed activities and can be disciplined for failing to do so. The two frameworks, tax status and license-law supervision, operate separately. A written agreement should define the relationship.CA Business & Professions Code

A written buyer-representation agreement primarily:

• a.Guarantees the buyer's loan approval
• b.Establishes the broker as the buyer's agent and sets how the broker is compensated✓
• c.Waives the buyer's right to inspect
• d.Transfers title of a property to the buyer

A buyer-representation agreement creates an agency relationship in which the broker represents the buyer and defines the term, duties, and compensation. It clarifies whether the buyer or seller ultimately pays the buyer-broker's fee. Like listings, it should be in writing with a definite term.CA Civil Code